Cosatu backs pension changes

Johannesburg - Cosatu has backed down on calls for a moratorium on the changes the government wants to make to the retirement system.

Instead, the union federation has agreed to participate in roadshows with the government to inform workers on what the reforms will involve.

Cosatu’s about-turn follows a meeting on Monday with Finance Minister Nhlanhla Nene, which it had requested.

Workers across sectors are in a panic over proposals to change the retirement system, which will see the Treasury introducing mandatory pension preservation.

Many workers believe this will lead to the government “nationalising” their money, because they will not have easy access to their future savings after the reforms are introduced in March.

This is leading to mass resignations in the public service. A total of 20 000 teachers have already resigned so that they can access their pensions.

Cosatu had threatened that its affiliates would down tools if the government did not agree on the moratorium until workers properly understood what the changes entailed.

But Cosatu president S’dumo Dlamini told The Star on Wednesday that, for now, the federation would instead participate in the roadshows.

“We agreed to work hard on the roadshows to tell people not to panic about the new reforms,” he said.

Earlier, Minister in the Presidency Jeff Radebe admitted that the government’s communication on the reforms had been poor. He said Nene would embark on an aggressive awareness campaign to explain the changes and try to allay fears.

Dlamini said Cosatu would hold a meeting with the Treasury soon to iron out its other concerns on the reforms.

The Treasury believes its proposals will help ensure that South Africans are not left with nothing once they retire.

It had suggested that after laws were introduced to prevent the withdrawal of retirement savings before retirement, that a person be allowed one withdrawal a year from each preservation fund. But it is now proposing one withdrawal per person a year to reduce the number of withdrawals.

Members of pension funds and retirement annuity funds can take up to one-third of their savings as a cash lump sum at retirement. The first R500 000 is tax-free and the remaining two-thirds must be used to buy an annuity.